Dollar Doldrums, Lessons from 2002–03, Bright Spots

By Lori Calvasina
Published October 3, 2022 | 6 min listen

In this edition of the podcast, we reflect on hot topics and some of the most interesting things we saw and heard last week. Three big things you need to know: First, the stronger Dollar is a clear negative for S&P 500 performance and earnings, but US equities still tend to benefit from safe-haven status within the broader global equity landscape and certain sectors tend to be more insulated from an EPS perspective. Second, S&P 500 performance in 2022 has been similar to how stocks traded in 2002 following the Tech bubble and the initial rally off the September 2001 lows. Back then, the bottoming process was lengthy with similar lows tested multiple times before the recovery could resume, but stocks did stage a strong rebound in 4Q of 2002 off an October low. Third, US equities may not be out of the woods, but there are a few bright spots worth noting in our high-frequency indicators (the equity put/call ratio recently approached Dec 2018’s level, the forward P/E is back to average on our $212 EPS forecast, the performance of popular hedge fund stocks has stabilized, and Republicans have pulled ahead of Democrats in the generic Congressional ballot).

Disclosures and Disclaimers

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Lori Calvasina

Lori Calvasina
Managing Director & Head of U.S. Equity Strategy, RBC Capital Markets

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